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CAD/JPY - Reward to Risk of a Bullish Trade Idea

CAD/JPY has been drifting but starting to look more bullish recently.  In October however, it has retreated. If we still believe CAD/JPY to be bullish, this dip could be providing a buy-on-the-dip trade idea.

$CADJPY Daily Chart

(click to enlarge)

Taking Out the Noise:
- Price action has been choppy since 2016, but if we take out the noise, we really see 3 things.
1) There was a range in 2016-2017. This could have been interpreted as an inverted head and shoulders.
2) Instead of developing a bullish trend after the inverted H&S pattern, the CADJPY ended up in another, higher range. 
3) There is a rising channel since March 2018. 
- The rising channel is not a very good sign that the market is bullish at all especially because the previous downswing was so sharp and the rising price action so choppy.
- However, if the RSI holds above 40 AND price holds above the 200-day simple moving average (SMA), we can add bullish bias to this chart. 
- A break below $83.60 on the other hand opens up further downside.
Reward to Risk Exercise:
- The upside is conservatively 89 and aggressively 91. For the same of simplicity, let's say the average target is 90.00. 
- Now, let's say we put in an order to long CAD/JPY at 85.25.
- Let's say the stop is 83.20, which is below the 83.60 support pivots. 
- The reward to risk profile for this trade would be: 

(90-85.25) : (85.25-83.60) = 4.75:1.65 = 2.87:1

In my opinion, this is a decent reward to risk. 

With the conservative target of $89, the R:R would be 1.87:1.

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